Mobile Home Taxes

Tonya Lew and Bryon Clark talk in March of 2018 about barely making the deadline for paying the property tax on their mobile home in Missoula before it would go up for auction along with nearly 200 others for being delinquent. The couple said working minimum-wage jobs and running on a tight budget makes it hard to factor in the property tax bill.

When Missoula County sent notices to nearly 200 low-income mobile home residents last March warning their homes would be auctioned if they didn’t pay delinquent taxes, the subsequent news coverage prompted a statewide search for solutions.

Now, a Billings lawmaker has proposed a fix to keep people from becoming homeless.

Sen. Margie MacDonald, a Democrat, introduced a bill last week that would exempt mobile homes from personal property taxes if they are at least 28 years old and worth less than $10,000.

In Missoula County, about 2,170 of the roughly 5,000 mobile homes would be exempt under the proposed law.

The maximum that any of the residents of those 2,170 homes pay now in annual county property taxes is $135, but many pay less than that due to the age and appraised value of the homes.

The bill, SB 204, has the support of Missoula County Clerk and Treasurer Tyler Gernant. Both he and MacDonald say these older mobile homes don’t provide a significant amount of tax revenue to county coffers. Statewide, they account for a combined average about .003 percent of the state’s total property tax revenue, according to the Montana Department of Revenue.

Gernant and MacDonald also say county governments all over Montana spend money sending out bills and notices to these properties and hiring Sheriff’s departments to post auction notices. Gernant said Missoula County often spends $150 to collect on a $70 tax bill, which means the owners are on the hook for $220 in that case, making it even more likely their home will get sold at auction.

MacDonald said the people in her district who would be affected by the bill all work full-time jobs and struggle to make ends meet due to Montana’s low wages and unexpected healthcare bills.

“This bill provides strategic tax relief to keep families in their homes by focusing on the oldest, lowest-value and least revenue-producing mobile homes,” she noted. “Across our state many Montanans lose their homes every year at county auctions due to tax debts that are frequently below $200. This is because mobile homes are usually taxed as personal property.”

How state law allows taxing jurisdictions to pursue mobile home taxes is much different than when people fall behind on, for example, a property tax bill for a single-family home on land they own.

“And when it comes to delinquent personal property taxes, in this instance mostly mobile homes, statute provides limited options for the government to move forward.”

Gernant said people with delinquent personal property tax bills often have much less time, about 5 months in Missoula County, to pay their bill before the property is seized and sold at auction. The county does give several warning notices, which cost taxpayers money. For so-called "real property," such as a home on a foundation, people often have about three years to settle a bill before they are in danger of losing their home, according to Gernant.

“There’s a huge number of these in Missoula County that would be affected by this bill,” Gernant told the Senate Taxation Committee last week.

Gernant said Missoula County would lose less than one-tenth of 1 percent of the total tax revenue the county collects, or about $155,000.

“So there’s a huge bang for your buck here in terms of what you’re getting and what you’re losing,” he said. “This is also an important issue because these tend to be the folks most vulnerable to losing their homes."

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Gernant said holding the mobile home auction is probably the worst part of his job.

"There’s not pleasure in being the person who kicks someone out of their home," he said. "This happens almost every year. Every year there’s a story about we’re kicking people out of their homes and in a state that has an affordable housing crisis, these are affordable homes for these folks.”

According to the fiscal note on the bill provided by the Department of Revenue, about 11,000 homes in the state would be exempt under the proposed law, and there would be an $84,000 revenue loss statewide because counties only pass on a portion of the property tax revenue they collect to the state.

Svein Newman is a Missoula resident who organized a crowdfunding campaign last year after reading a Missoulian article about the impending mobile home auction.

“I was moved by the newspaper reporting to set up a crowdfunding campaign,” he told the committee. “We kept 31 families from losing their home with well under $10,000. That’s 31 of the 60 or so properties. These are single working parents, seniors working on fixed incomes, some really great people who found themselves in a tough spot.”

Newan added the county and city taxpayers have to pay for services for people who suddenly find themselves homeless.

“If somebody loses their home from a tax bill, there are economic and community costs,” he explained. “If someone is sleeping in a car and they get hypothermia, if they don’t have insurance and an ambulance picks them up and takes them to the emergency room, that’s thousands of dollars. The costs of housing and food assistance add up. There’s days of missed work and school.

"It’s cheaper and more humane to fix this problem up front with a little targeted tax relief.”

The only opposition to the bill came from Rocky Haralson, representing the Montana County Treasurer’s Association. He said representatives from smaller counties in Montana believe that the bill would exempt too many properties and result in a loss of too much revenue.

According to the Montana Department of Revenue, the highest percentage of taxable value that would be exempted under the proposed law would be .23 percent of the total taxable value in Lincoln County. That’s less than one quarter of one percent.

If there are an average of two people living in each of the 11,000 mobile homes that would be exempted, that would mean roughly 22,000 residents in a state with a population of just over 1 million.

“Anytime we can provide meaningful tax relief to 2 percent of Montanans for 1/300th of 1 percent of state property tax revenue and 1/3,000th of 1 percent of state revenue, then that’s worth looking at, particularly if we’re keeping people in their homes,” Newman said.

Maureen Rude with the Montana Housing Coalition said her organization supported the bill.

In Missoula County, all mobile homes have a combined taxable value of just over $1.1 million, and the mobile homes that would be exempt have a combined taxable value of $173,000. The combined taxable value of all property in the county stands at $231.8 million.

The bill is currently under consideration in the Senate Taxation Committee.

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